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Civil Society Strategy: Much to welcome, tempered by the broader context

9 August 2018

Today, the Westminster government published its Civil Society Strategy. It rightly highlights the vital importance of a thriving, diverse civil society, which enriches lives and creates a fairer society for all.

It also recognises the invaluable contribution of charities to our communities and public life, their expertise in delivering services and informing policy-making, as well as the importance of their independence and ability to give voice to the people and issues they care about. It states:

“Charities and social enterprises – ‘the social sector’ – are the core of civil society. A healthy, independent, and engaged civil society is a hallmark of a thriving democracy. A robust sector is a sign of a confident democracy, which offers many ways in which citizens’ views and concerns can be amplified” (p. 69).

As we and others recommended during the consultation, the strategy proposes a rejuvenation of grant-funding by government departments, rebalancing the split between grants and contracts as the basis of how the state funds work delivered by not-for profit organisations.

It also sets out a vision for the UK to become the world leader in philanthropy practice. The contribution of trusts and foundations to civil society is recognised throughout, and we are pleased to see the work of more than a dozen ACF members referenced. Several are featured in extensive case studies of innovative practice.

It is encouraging to see a cross-government commitment in the strategy, which will be vital to its success, and that the Department of Digital, Culture, Media and Sport (DCMS) will “give a biennial public update report on the ambition and commitments of the Strategy” (p. 28). It is also essential that civil society plays an active and direct role in its interpretation and implementation.

There is, therefore, a lot to welcome, but this is tempered by the broader context from which the strategy emerges – one of unprecedented cuts to local authority and central funding upon which much of civil society’s activity relies.

This is a time when many civil society organisations are facing growing pressure to meet the needs of the communities they serve, ongoing financial peril and funding uncertainty. Because of this, questions may remain on whether, over the long term, civil society will be able to thrive.

The foundation sector is absolutely committed to supporting civil society, and many philanthropic grant-makers want to work innovatively, collaboratively and cross-sector. But the foundation sector’s annual giving of £6.5bn is already subject to very high (and rising) levels of demand. Even if new philanthropy can be encouraged, this could not possibly keep pace with the state’s funding decline and rising need.

Implementing the strategy in this context will be a major challenge for government, and for civil society. ACF looks forward to playing a part in this collective endeavour, and to supporting our members to engage (for example through one of ACF’s many issue-based funder networks) as the government begins the vital next phase of its work - making the strategy’s many welcome statements a positive reality.

10 key points, and some emerging questions, for charitable foundations

The strategy is more than 100 pages long, and there is much detail that cannot be presented here. It is likely that individual foundations may want to follow up on specific issue-based commitments in the strategy (for example those which work with children/young people, faith groups, the health sector, or on issues related to loneliness).

Below, we highlight 10 key points for the foundation sector as a whole, and some of the emerging questions that arise from them.

1. There is clear recognition of the vital role of philanthropy in our society, and commitments to increase philanthropic activity.

Key quote: “This country has a long tradition of philanthropic organisations, both small and large, set up independently of government to respond to the challenges of society…Although the government should never seek to influence or direct the way that private philanthropy is directed, the government is ambitious for the UK to become the global centre for philanthropy practice, including the role of corporate philanthropy” (p. 69).

Questions arising:

- How do we ensure that the charitable foundation/trust model is central to these plans?
- In what ways might ACF’s issue-based networks work with government to take forward related aspects of the strategy (e.g. place-based funders network, corporate foundations network)?

2. A renewed commitment is made to the principles of the charity Compact (a document which sets out a series of principles and commitments governing the relationship between the social sector and the government last published in 2010), the prominence of which has been fading in commissioning practice and policy engagement.

Key quote: “The government is committed to embedding open policy making across departments – giving civil society significant opportunities to achieve policy change…The government also recognises that there is a job to do to reach a collective approach across Whitehall in the way that we work with and for civil society. We are therefore keen to get our internal workings in order to ensure that we effectively join up at crucial stages of policy development to reflect the voice of the sector and to obtain valuable and early insight into how our policies are likely to impact communities and the sector.” (p. 70).

Question arising:

-- How can charities hold government to account in this renewed commitment to the Compact, and can foundations play a particular role in this?

3. There is a commitment to support place-based innovation and the need to engage philanthropy and social investment models, as well as devolving power and decision-making to communities.

Key quote: “The government will…develop new models of community funding, which bring together social impact investment with philanthropic funding, crowdfunding, community shares and corporate investment to create substantial place-based investment programmes” (p. 60).

Questions arising:

- How can foundations that are already embedded in the social investment marketplace share more of their learning with government?
- How can funders with expertise in place-based initiatives share their expertise, and be linked into emerging opportunities?
- Could foundations be considering more explicitly the role of participatory grant-making, and do more to catalyse the existing potential, power and creativity in communities?

4. The strategy sets out an intention to work with charities and their regulator to identify ways for them to amplify their campaigning and voice, shine a light on dark corners and raise concerns. Many charities reported a ‘chilling effect’ as a result of the Lobbying Act 2016, in curtailing their freedom to campaign.

Key quote: “Civil society has a long and proud tradition of campaigning for change and providing voice for the disempowered and disadvantaged in society…The government will work with civil society, the Electoral Commission and the Charity Commission to explore what other non-legislative steps could strengthen civil society’s confidence in its campaigning and advocacy role” (p. 70).

Questions arising:

- Will charities who have expressed concern about their voice being curtailed in recent years be sufficiently reassured by the positive words in the strategy?
- How can charities raise concerns with government if in practice the ‘chilling effect’ continues to be felt?
- What more can foundations do (both financially and in other ways) to support the efforts of civil society advocacy and campaigning initiatives?

5. There is a plan to create a forum of civil society organisations to help shape government policy, an ambition to create a leadership pipeline.

Key quote: “The government will convene key civil society stakeholders over the next year, to explore the potential for a common vision and mission for strengthening the leadership of social sector organisations and the potential for specific government interventions” (p. 70).

Question arising:

- How do we ensure that foundations’ expertise and voices are around the table, and contribute to these conversations and plans?
- What more can foundations do to enable civil society leadership to develop and be heard?

6. There is a welcome commitment to rejuvenate the use of grant funding, which the sector has long called for following a sharp decline in recent years. There are also commitments to increase government transparency in grant-making, and calls for others to do the same (many foundations are openly committed to and engaged in these efforts, such as through 360Giving).

Key quotes: “The government wishes to broaden the range of funding options for community initiatives. This includes a revival of grant-making – ‘Grants 2.0’ – to reflect the fact that grants can combine flexibility with the accountability and performance rigour of a contract, and also bring ‘additionality’, such as philanthropic or in-kind investment” (p. 111).

“The government is increasing transparency of public sector grant-making by publishing grants data to an open, standardised format…The government also wants to see a greater number of grant funders in the UK commit to greater transparency in grants funding data, and will host a ministerial event with key sector partners to discuss how to collectively improve data infrastructure and open data publication to support civil society” (p. 112)

Questions arising:

- Given the commitment to reverse the downward trend, how should foundations continue to champion the added value of grants as a principal way for government to fund civil society organisations?
- How should foundations respond to a likely increase in approaches and opportunities for match-funding with government-backed initiatives?
- How can foundations do more to drive transparency in their own grant-making (transparency is the focus of a forthcoming ACF Stronger Foundations working groups)?

7. When the UK leaves the European Union, a Shared Prosperity Fund will be created as an alternative to some of the current EU funding streams (many of which at present support significant activity in civil society). It remains unclear whether and how civil society will be able to compete with other interest in accessing this funding.

Key quote: “The UK Shared Prosperity Fund will tackle inequalities between communities by raising productivity, especially in those parts of our country whose economies are furthest behind. The government intends to consult widely on the design of the UK Shared Prosperity Fund this year, as we committed to in the Industrial Strategy. There will be opportunities for civil society and communities to consider their role in supporting inclusive growth and driving productivity” (p. 58).

Questions arising:

- How can foundations influence the design and distribution of the Shared Prosperity Fund, and support civil society to do so?
- How might foundations’ respond to the likely shortfall of replacement funding post-Brexit?

8. There is a commitment to enable greater trustee board diversity, which ACF and others have highlighted as a key issue.

Key quote: “The government will work with civil society stakeholders and the Charity Commission to explore and agree on collective action to open up trusteeship to people from different backgrounds and with a broad range of skills, and encourage more young people under the age of 30 to become trustees (p. 77).

Question arising:

- How can foundations lead the way in supporting more diversity on trustee boards, both their own and the civil society organisations they fund (this is a key focus of ACF’s Stronger Foundations Diversity, Equity and Inclusion working group)?

9. Money in dormant bank accounts will resource two new funding organisations.

Key quote: “The government will…direct £145 million from dormant bank accounts to two new organisations, both of which will be independent of government, with their own governance structures. With a small core team, they will be tasked with deploying this funding to tackle some of the most serious social injustices: youth unemployment and financial exclusion (p. 21).

Questions arising:

- How will these new entities link with existing civil society initiatives that work on these issues?
- How can foundations engage with them?

10. The strategy acknowledges the important contribution of charity tax relief, which is currently the subject of an independent Charity Tax Commission. It also sets out a plan to review social investment tax relief so that more investors are attracted to opportunities that offer both a financial and social return.

Key quote: “Reducing restrictions on the size and type of projects which can claim Social Investment Tax Relief could accelerate communities taking ownership of important community assets and expand the use of small scale finance for community energy projects. In these areas Social Investment Tax Relief could play a bigger role in helping social sector organisations to be more financially resilient” (p. 75).

Questions arising:

- How will the strategy be interpreted by the Charity Tax Commission?
- What are the potential implications for the social investment marketplace of the review of social investment tax relief?

For more information on ACF’s response and our next steps, please contact Max Rutherford, Head of Policy on Max@acf.org.uk